Nukkleus Inc. Reports Significant Financial Challenges, Decline in Revenue and Net Loss in Latest 10-Q Filing

Nukkleus Inc. reported significant financial challenges in its latest 10-Q filing for the period ending June 30, 2024. The company experienced a dramatic decline in revenue, with total revenues for the three months ending June 30, 2024, at $175,214, a stark decrease from $5,212,056 in the same period of 2023. For the nine months ended June 30, 2024, revenues totaled $5,677,362, down from $16,222,388 in the prior year. This decline is attributed to the termination of a General Services Agreement (GSA) with Triton Capital Markets Ltd. (TCM) effective January 1, 2024, due to non-payment, which previously accounted for a significant portion of the company's revenue.

Despite the revenue drop, Nukkleus reported a gross profit of $125,476 for the three months ended June 30, 2024, compared to a gross loss of $(158,018) in the same period of 2023. For the nine-month period, gross profit improved to $780,737 from a loss of $(64,929) in the previous year. This improvement in gross profit was primarily driven by a reduction in costs associated with general support services.

Operating expenses increased significantly, with total operating expenses for the three months ended June 30, 2024, at $1,517,123, up from $1,054,783 in the same period of 2023. For the nine months, operating expenses rose to $13,539,462 from $3,090,731. The net loss for the three months was $(1,616,241), compared to $(1,209,744) in the prior year, while the nine-month net loss escalated to $(12,973,753) from $(3,149,315).

The company’s financial position has deteriorated, with total current assets dropping to $706,447 as of June 30, 2024, from $2,928,408 as of September 30, 2023. Cash reserves also fell sharply to $6,138 from $19,318 in the same timeframe. Nukkleus reported a working capital deficit of approximately $11.4 million, raising substantial doubt about its ability to continue as a going concern.

Strategically, Nukkleus has made several moves, including the acquisition of a 51% stake in Match Financial Nigeria Limited in June 2024, although no activity has been reported since its incorporation. The company has also engaged in various financing activities, including issuing promissory notes and converting debts into equity, to bolster its capital structure amid ongoing liquidity challenges.

The management has acknowledged the need for additional funding to support operations and business development, with no committed future funding currently available. The company plans to raise capital through equity sales, but the success of these efforts remains uncertain.